It was a grim session for shareholders in ASML, the Dutch semiconductor equipment maker, as the stock suffered a hefty sell-off as first quarter revenues and profits fell short of expectations and the group warned of declining orders.

However, analysts interpreted the company’s order outlook as a positive signal. “As we have argued before, weak orders are positive for the medium term outlook of the share price,” said Janardan Menon at Dresdner Kleinwort Wasserstein.

“We believe that the weak order trend today, while lowering 2005 numbers, helps provide order upside into the second half of this year and higher 2006 earnings per share, resulting in upward momentum for the share price.”

Deutsche Bank took a similar view. “Buy on weakness as the unit order weakness at ASML continues to reflect the slow bottoming-out process the semiconductor cycle is experiencing,” said analyst Nicolas Gaudois.

ASML shares ended the day with a loss of 4.5 per cent at €11.86. Elsewhere in the chip sector, Infineon fell 0.4 per cent to €7.31 and STMicroelectronics shed 1 per cent to €12.46.

But there was a better feel to the broader market as the FTSE Eurofirst 300 index called a halt to two days of losses and rose 0.4 per cent to 1,101.82.

Food retailing was one of the best-performing sectors, as France’s Carrefour gained 1.9 per cent to €41.75 after unveiling a well-received set of quarterly results.

“Overall, we interpret the figures as an indication that the strategy of lowering prices to gain market share is right, but the difficult market environment in France makes improvements small and solid like-for-like increases are likely to take a long time,” said Stefan Weiss at West LB.

“At around 14 times estimated 2005 earnings, some improvement is already in the share price and we maintain our ‘neutral’ rating.”

Rival French retailer Casino rose 0.9 per cent to €64.35. Germany’s KarstadtQuelle extended the previous day’s results-driven advance by another 0.8 per cent to €8, although Mr Weiss at WestLB was downbeat about the company’s prospects.

“As long as there is no indication that the overall sales level is improving significantly, we believe KarstadtQuelle will have little room to breathe,” he said. WestLB reiterated its ‘underperform’ rating on the stock.

There was plenty of interest in the building materials sector amid hopes that US politicians were close to formalising compensation for asbestos victims, helping to remove uncertainty about compensation levels.

Saint Gobainrose 0.4 per cent to €47.70, while Lafarge added 0.7 per cent to €76.05 and Vinci rose 0.8 per cent to €116.10.

Switzerland’s Holcim, the world’s second-largest cement maker, rose 2.7 per cent to SFr77.05 after initiating a compulsory buyout of the 5 per cent of Aggregate Industries of the UK it does not already own.

Volvo’s ‘B’ shares fell 3.5 per cent to SKr301. The Swedish truckmaker is reportedly looking to make acquisitions to boost its position in construction equipment and catch up with US rival Caterpillar.

The oil and gas sector came under pressure from a renewed drop in crude prices following news of a substantial increase in oil and gasoline inventories in the US.

Credit Suisse First Boston reduced its recommended “overweight” position on the energy sector from 6 per cent to 2 per cent.

CSFB said the sector looked likely to underperform the market over the next one or two months but believed it would outperform on a six-to-12-month view.

Total of France fell 0.5 per cent to €182.70, Royal Dutcheased 0.3 per cent to €47.08 and Italy’s Eni slipped 0.6 per cent to €20.28.

Mediaset, the Italian broadcaster, fell 3.7 per cent to €10.575 on news that Fininvest, the holding group controlled by the family of prime minister Silvio Berlusconi, was selling a 17 per cent stake in the company.

The sale has been described by some observers as a “political ploy” to deflect attention from Mr Berlusconi’s political woes.

Troubled Irish drugs group Elan jumped 18 per cent to €3.49 after a clinical trial confirmed the effectiveness of its suspended Tysabri mutiple sclerosis treatment.

However, analysts played down the possibility of the drug’s return to market, saying the trial did not address the safety issues that led to its withdrawal.

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